Obamacare A Mess? Liberals Say Go Single Payer.

Paul Roderick Gregory
, ContributorI cover domestic and world economics from a free-market perspective.Opinions expressed by Forbes Contributors are their own.

More suspicious voices on the right warned that the Left would use a collapsing Obama Care as an excuse for a single payer medical care system. The “train wreck” of the Obama Care roll-out has underscored its incredible complexity, contradictions, and peccadilloes, and we are just beginning to scratch the surface. Who knows what horrors lie buried in the thousands of pages of regulations that no one has read?

The warning that the Republicans will be blamed for the crash of Obama Care is already coming true. As ueber-Liberal Robert Reich writes from his Ivory Tower of Berkeley (Don’t Blame Dems. We Wanted Single Payer):

“Had Democrats stuck to the original Democratic vision and built comprehensive health insurance on Social Security and Medicare, it would have been cheaper, simpler, and more widely accepted by the public.”

The Left is champing at the bit to go single payer, even before Obama Care has begun. The employer mandate has been delayed and thousands of exemptions have been granted. Of the major provisions, only the individual mandate and fines remain, and even they may be delayed. But the liberals say: Let’s change the venue and the rules before the game even starts.

The oracle of the Left, New York Times columnist Paul Krugman (The Big Kludge) explains that Obama Care, as constituted, is too complicated a mix ofthe private and public sectors. (Why did he not say that when the bill was before Congress?)Krugman explains that Obama Care was given to us by the Republicans in cahoots with Big Insurance, Big Pharma, and Big Hospital. Poor Obama and the Democrats had to take what was possible not what was best because of the rascally Republicans.

Krugman then issues his siren song for the single payer system:

“Imagine, now, a much simpler system in which the government just pays your major medical expenses. In this hypothetical system you wouldn’t have to shop for insurance, nor would you have to provide lots of personal details. The government would be your insurer, and you’d be covered automatically by virtue of being an American. Of course, we don’t have to imagine such a system, because it already exists. It’s called Medicare, it covers all Americans 65 and older, and it’s enormously popular. So why didn’t we just extend that system to cover everyone?”

Sounds good does it not? We have no more worries. We can all go to the doctor or hospital, pick up our drugs at the pharmacy and initial a receipt that says: “Paid for by Uncle Sam.” All these providers are sitting there waiting for us to arrive so they can serve us with efficiency, sympathy, and good will.

Before falling for these myths, consider what Reich and Krugman are not telling us.

First, they do not admit that their beloved single payer system is being grafted into a Medicare which already cannot keep its promises. Medicare’s unfunded liabilities eclipse those of Social Security. Any actuary will tell you that, when the next generation retires, Medicare will be trillions of dollars short in paying its bills. In fact, Obama Care largely gets its own funding by robbing an already underfunded Medicare to pay for the Obama exchanges and Medicaid expansion.

Second, single payer systems elsewhere are paid for primarily by payroll taxes. The U.S. payroll tax rate is currently 15.3 percent with an additional 2.3 percent for higher income earners thanks to Obama Care. In the single payer systems of Europe, the payroll tax averages 37 percent. (Economists have long taught that the wage earners ultimately pay the payroll tax whether it is formally paid by the employer or employee). To pay for a single payer system like Europe’s, America’s middle class would face a doubling of payroll taxes and a fifty percent increase in their total taxes on income. Americans would pay about 45 percent of their earnings for federal taxes on income alone. After that they have to worry about state taxes and local property taxes.

Third, the Obama Care website is only about directing families to buy health insurance that meet Obama Care requirements, while informing them what the policy will cost after subsidies. It does not address real medical-care issues like which treatments will be covered, which doctors you can see and with what wait times, what reimbursement fees will doctors receive, what R&D costs pharmaceutical companies can recoup, or what kind ofend-of-life care can seniors count on. If the Obama Care administration cannot even get you enrolled, how can you expect it to make these hundreds or thousands of decisions for millions of families. If Obama Care alone requires 12 million words of regulations, Obama’s “SocialSecurity USA” will need 100 million words of regulations, which no one understands, much less has read. What 800 help line will be able to guide you through this mess?

Fourth, what talented young person will train for a decade to get an MD degree or a Ph.D. in science to qualify for work that is directed every step of the way by a Canadian IT company? Instead of patients and lab research, that person’s time will be devoted to paper work and arguing with the 800-SOCIALSECRUITYUSA helpline. Under these conditions, why would Big Pharma risk billions to develop a cancer cure or the new equipment for brain or heart surgery. Instead, America’s great pharmaceutical companies will become public utilities earning a fixed rate of return guaranteed by SOCIALSECURITYUSA. Why bother when Switzerland and Israel are still the land of the free? Let’s get out of here before even they disappear.

Liberals will accuse me of crying wolf. After all, we have the best central planners in our MIT’s, Harvards, and CalTechs. This Gregory guy says the problem is too complex, but what does he know.

My response: Let these true believers study the Soviet economy or read Hayek’s The Fatal Conceit. I doubt either would help change their mind.